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TMI Blog2021 (1) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... nlight and its storage. The description and function of each of the equipments is discussed herein under: a) Solar Panels (also known as "Photovoltaic / PV Panels") are made of solar cells (also known as "PV cells") which are connected to each other in series and parallel connection. Solar cells are made up of silicon semiconductor material which converts the energy generated from sunlight into electrical energy. The electrical energy generated by conversion of sunlight is known as Solar power. Solar PV modules/panels are to be positioned at proper inclination to collect maximum energy from the sunlight. Hence, these panels are generally installed on the slanting rooftops or slanting industrial sheds with the help of ruts and bolts so that it can perform its designated function i.e. to collect sunlight in efficient manner. However, where slanting base for mounting is not available, these panels are stationed on the module mounting structures erected in the fields / rooftops to collect maximum energy from the sunlight. These mounting structures are made of angles, channels, etc. and these are fixed on a concrete foundation. These structures can be detached from civil foundation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (Grid Connected) on a turnkey basis whereby the Applicant will supply the abovementioned equipment and will undertake designing, erection, commissioning and installation of the same at the customer's site. (A) Solar Rooftop Plant: Solar Rooftop Plant is a Solar Photovoltaic system which generates electricity from solar panels mounted on the rooftop of a residential or commercial building or structure viz industrial shed. These are usually ranging from few Kilowatt (KW) to less than a Megawatt (MW). Since Solar PV modules/panels are to be positioned at proper inclination to collect maximum energy from the sunlight, these panels may be installed on the slanting rooftops / industrial sheds with the help of nuts and bolts or where slanting base for mounting is not available, these panels may be fixed on the module mounting structure by using nuts and bolts. The module mounting structure is made of standard GI/aluminium angle and fixed on rooftops with the help of concrete foundation. The Solar panels as well as the mounting structure can be easily unbolted, moved and installed at another place. The remaining two parts of system i.e. Solar PCU and Battery bank are moveable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angles / structures can be fixed into the base which can be removed at any time depending on the requirement and re-fix in a different place. The remaining two essential parts of system viz. Solar PCU and Battery bank can be installed anywhere connected to the panels. 1.5 Apart from three essential components i.e. solar panels, solar PCU and battery bank, following components are also required in case of ground mounted solar power plant: (iv) Transformer: the power output of the inverter is at the low voltage and as there is high loss at the low voltage, transformer is used to step up the voltage at the higher level in order to minimize the cable losses. (v) HT Switchgear: this component consists of the relays and the circuit breaker that in turn are used to protect the system in case of any faults in the plant. Air Circuit Breaker, Vacuum Circuit Breaker and SF6 circuit breaker are normally used in the HT switchgears. (vi) Outgoing Switchyard: This consists of the power transformer, its protective relays and switchgears, control and relay panels. Switchyard is the key portion which joins/integrates the solar power plant to the utility gird. (vii) Energy Meters: Energy me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5% S.No. Chapter/Heading/Sub-heading/Tariff item Description of Goods 234 84, 85 or 94 Following renewable energy devices & parts for their manufacture a) Bio-gas plant b) Solar power based devices c) Solar power generating system d) Wind mills, Wind Operated Electricity Generator (WOEG) e) Waste to energy plants / devices f) Solar lantern / solar lamp g) Ocean waves/tidal waves energy devices/plants h) Photo voltaic cells, whether or not assembled in modules or made up into panels. 4.3 Keeping in view the above position of law during the relevant period, the Applicant sought an advance ruling from the Authority of Advance Ruling (GST), Haryana on the following issues: A. Whether the EPC contract for complete design, engineering, manufacture, procurement, testing, inspection and complete erection and commissioning of solar power generating system (SPGS) will result into 'Composite Supply' as defined in Section 2(30) of the Central Goods and Services Tax Act, 2017? B. In case, the supply of SPGS is treated as 'Composite Supply, whether supply of PV Modules/Inverters or any supply covered under Chapter Heading 84, 85 or 94 of the Central Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il has also clarified that the exact formulation will be worked out in consultation with Ministry of Law. If different valuation methodology is determined by the Ministry of Law, then the specified formulation as notified under CGST/SGST Act 2017 will be applicable on the applicant. 4.8 The Govt., in exercise of the powers conferred by sub-section (1) of Section 9 and sub-section (5) of section 15 of the CGST Act, 2017 and on the recommendations of the Council, brought amendments in the Notification No.1/2017- Central Tax (Rate) dated 28.06.2017 by way of Notification No. 24/2018- Central Tax (Rate) dated 31.12.2018 (hereinafter referred to as goods rate note notification). In the said Notification, in Schedule-1-2.5% against Serial No. 234, in the entry in column (3), the following Explanation has been inserted in the end, namely; - "Explanation:- If the goods specified in this entry are supplied, by a supplier, along with supplies of other goods and services, one of which being a taxable service specified in the entry at S.No. 38 of the Table mentioned in the Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017 (G.S.R. 690 (E)), the value of supply of goods for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the amendments made with effect from 01.01.2019 by the Govt. vide notifications dated 31.12.2018 under the CGST/HGST Act, 2017 in the respective entries. The Appellate Authority further held that there is a change in the rate of tax and the percentage of Goods and Services involved in SPGS, after Notification No.24/2018- Central Tax (Rate) dated 31.12.2018 and Notification No. 27/2018- Central Tax (Rate) dated 31.12.2018which have completely changed with effect from 01.01.2019. Accordingly, the advance ruling dated 29.08.2018 was quashed and the Applicant was permitted to approach the advance ruling authority for taking a decision afresh in accordance with law. A copy of the order dated 26.04.2019 passed by the Hon'ble Haryana Appellate Authority for Advance Ruling is enclosed herewith as Annexure -6. 4.12 Keeping in view the Notifications dated 31.12.2018 and the order dated 26.04.2019 passed by the Hon'ble Appellate authority, the Applicant is filing the present advance ruling and the provisions pertaining to advance ruling under the CGST Act provided under Chapter XVII of the CGST Act shall be applicable to determine the questions enunciated under Section 97 of CGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification No.1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no. 24/2018-Central Tax (Rate) dated 31.12.2018 and SI no. 38 inserted in Notification no. 11/2017- Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018? 6. Interpretation of the Applicant: 6.1 In the instant case, the Applicant is proposing to supply goods and services relating to designing, erection, commissioning and installation of SPGS at customer's site. 6.2 Thus, in order to be covered under SI no. 234 of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 as amended vide Notification no.24/2018-Central Tax (Rate) dated 31.12.2018 and SI no. 38 inserted in Notification no. 11/2017- Central Tax (Rate) dated 28.6.2017 vide Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018, the supply must fulfil the following criterions: i. The contract must be for supply of SPGS. ii. The supply of SPGS must be along with other goods. iii. The supply of SPGS must be along with service by way of construction or engineering or installation or other technical services, provide in relation of setting up of SPGS. 6.3 If the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s are installed in LT panel. Transformer is used to step up the voltage at the higher level in order to minimize the cable losses. Outgoing Switchyard which is used at Ground Mounted Solar Power Plant consists of the power transformer, its protective relays and switchgears, control and relay panels. Switchyard the key portion which joins/integrates the solar power plant to the utility gird. In that plant Utility Grid is also used, wherein, the energy generated from the solar power plant is transmitted to the consumers through the transmission line network commonly known as utility grid. Transmission line conductor with insulators and the transmission line towers combines together to form the utility grid. All of these equipments are functioning together to contribute in generation and use of electrical energy. 6.7 It is relevant to note that Electrical motors and generators are classified under Heading 8501 of the CTA. According to HSN Explanatory Notes to Heading 8501, the heading includes photovoltaic generators consisting of panels of photocells combined with other apparatus, e.g.- storage batteries and electronic controls such as Inverter and the panels or modules equipped w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The supply of SPGS along with other goods will be taxable @ 5%. The value for such supply shall be deemed to be 70% of the gross consideration charged for all such supplies. ii. The supply of service of designing, erection, commissioning and installation for the above goods, shall be taxable @ 18%. The value for such supply shall be deemed to be 30% of the gross consideration charged for all such supplies. 7. Discussion and findings: 7.1 The applicant Hero Solar Energy Pvt. Ltd. is engaged in the business of setting up of Solar Power Generating System (SPGS) on turnkey basis. Turnkey project is a project whereby the contractor agrees to fully design, construct and equip a facility ready to be used by the contractee. The applicant supplies, designs, installs, erect and commission SPGS for its customers. The SPGS installed by the applicant are in the form of Solar Rooftop Plant and Ground Mounted Solar Power Plant. The applicant had earlier filed an application for Advance Ruling dated 29.05.2018. But the issue on which ruling was sought was different from the issue at hand in this application. The applicant had then sought a ruling with regard to the following:- (i) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross consideration charged for all such supplies, and the remaining thirty percent of the gross consideration charged shall be deemed as value of the said taxable service." 7.5 Further, vide Notification No. 27/2018 (CT Rate) dated 31.12.2018, Serial No. 38 was inserted which read:- (1) (2) (3) (4) (5) 38 9954 or 9983 or 9987 "Service by way of construction or engineering or installation or other technical services, provided in relation of setting up of following, (a) Bio-gas plant (b) Solar power based devices (c) Solar power generating system (d) Wind mills, Wind Operated Electricity Generator (WOEG) (e) Waste to energy plants / devices (f) Ocean waves/tidal waves energy devices/plants Explanation:- This entry shall be read in conjunction with serial number 234 of Schedule 1 of the notification No. 1/2017Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR number 673(E) dated 28th June, 2017. 9 - 7.6 In view, of these notifications, the Appellate Authority for Advance Ruling, Haryana vide its order dated 26.04.2019 observed:- "In the changed facts and circumstances ..... 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